CANADIAN DOLLAR STRENGTHENS AGAINST USD AHEAD OF INFLATION DATA

Yesterday, sterling jumped after the UK and the EU agreed on a draft Brexit document. The political declaration between the two parties will be signed on Sunday. Today, the gains were constrained as the deal faced opposition from both political sides in the UK. Among the main critics of the deal was Dominic Raab, who until two weeks ago was the minister in charge of Brexit. In a statement, he said that the proposed deal will fall short of what the UK voted for. Therefore, there are limited chances that the deal will be passed in parliament.

The euro was little changed against key currencies after the European Commission released the consumer confidence numbers for November. The number fell to minus 3.9, which was lower than the minus 3 that traders were expecting. This was the lowest level since March 2017. The number has been on a slow decline as most Europeans start wondering about the health of the economy. Today, traders will focus on the preliminary third-quarter GDP numbers from Germany. They will also focus on the France and Germany PMIs.

The Canadian dollar strengthened against the US overnight. The decline of the pair was large because of the broad weakness of the USD. Traders are also focused on Canada’s inflation numbers, which will be released today. The expectation is that the median CPI will remain unchanged at 2%. The core CPI is expected to rise by an annualized rate of 1.6%, which will be higher than September’s CPI of 1.5%. Retail sales are expected to rise by a monthly rate of 0.1%. This will be higher than the previous decline of minus 0.1%.

EUR/USD

The EUR/USD was little changed overnight. Low volumes of trades are also expected today as most Americans keep off the market. It is now trading at 1.1414, which is slightly higher than the weekly low of 1.1358. The moving averages and the RSI are showing indecision because of the low volume and little movement in the pair. The average true range that indicates volatility has fallen to the lowest level this month on the hourly chart below.

GBP/USD

Yesterday, the GBP/USD moved from a low of 1.2763 to an intraday high of 1.2927 after a draft Brexit declaration leaked to the press. After sharp upward movement, the pair remained unchanged overnight as traders doubted whether parliament will accept the deal. It is now trading at the 1.2878 level. The MACD has moved above the neutral line. At the same time, the 15-day and 30-day EMAs have crossed one another. Today, there is a likelihood that the pair will mostly react to the pronouncements by the UK’s politicians.

USD/CAD

The USD/CAD pair has been moving higher over the past two months. It has moved from a low of 1.2782 to a high of 1.3320. On the four-hour chart, the pair has made an equidistance channel as shown below. It is now trading at the 1.3195 level, which is close to the lower support level. The RSI has fallen from 76 to the current 43. The pair will likely continue moving down to the important support of 1.3160.